WASHINGTON (AFP) - President George W. Bush has appointed one of his major political fundraisers, Thomas Foley, to run the Iraqi state business sector and draw up a sweeping privatization, Foley said

As the coalition's director of Iraq public sector development, Foley will effectively decide which of the roughly 200 state-owned companies, employing about half a million people, should survive or die.

Foley, who expected to depart as early as Monday, is to report to the US governor of Iraq, Paul Bremer.

The 51-year-old corporate turnaround chief, chairman of the NTC Group, denied the job was any kind of compensation from Bush.

"Does this sound a reward? It sounds like the short straw," he told AFP.

"I think that his picking me for this job had nothing to do with the fact that I have been a fundraiser for him, but more because he has known me and he knows my background and skills in business.

Bush had asked Foley to take the job after the US governor of Iraq, Paul Bremer, requested help, he said.

The president "knows that I have been involved in operating companies and particularly had done some turnaround work and managed companies in high-stress situations, and so he asked me if I would do this. So I said 'sure'."

All Iraqi state-owned businesses other than oil and the two state-owned banks would report to Foley, he said.

He had three main jobs: to get them up and running if they are viable, develop a privatisation plan and to develop trade and foreign commerce.

Many of the Iraqi state-owned companies, employing between about 400,000 and 750,000 people depending on the estimate, were unviable, Foley said.

A lot of companies had been part of former leader Saddam Hussein's military-industrial structure and were no longer required. Others were unable to compete either in Iraq or internationally.

"We have no way of knowing how many of the companies fit into that category," Foley said.

"We are certainly hoping that as many of them as possible can be developed into internationally competitive businesses because our goal here is to build a private sector economy that is active, competitive and can grow and provide jobs for the Iraqi people."

Foley said he would not be responsible for deciding on the closure of the unviable companies.

But "my role at least initially will be to assess which ones are viable and which ones are not."

The situation in Iraq was unique, he said.

"Security is a challenge, infrastructrure is a challenge. Many of these businesses don't have electricity or running water, and many of the businesses because it was a command economy were not economic," Foley said.

"Once you get the security issues resolved and the infrastructure issues resolved, you still have to contend with the fact that these businesses really need significant restructuring."

Foley said he had committed nine to 12 months to the job.

"I have left not only my businesses but a 12-year-old son and many involvements. It has not been easy to be available for this. But it is very important and the president asked me to do this and so I am going."

In June, a senior US adviser to the Iraqi industry ministry, Tim Carney, said the US-led coalition had decided to go back on an earlier pledge to leave any privatization decision to an elected Iraqi government.

Instead, it planned to start privatizations as soon as an interim administration was in place.